Korea confirms Apple, Samsung Flash deal probe

Enquiry to take in other arrangements between the two firms

South Korean Fair Trade officials have confirmed they are probing an alleged deal struck by Apple and Samsung to supply NAND Flash chips at below the market rate.

In October, a month after Apple launched the Flash-based iPod Nano, Korean Fair Trade Commission (KFTC) chairman Kang Chul-kyu said he was considering an investigation into whether Apple and Samsung had behaved improperly.

Claims that Apple had won significant price discounts from Samsung thanks to a large up-front order began to be made soon after the Nano's launch. Rival music player makers have since leapt on the allegations, and at least one of them must have formally complained to the KFTC, which would not investigate the matter without such an official notification.

The investigation's remit extends to earlier deals between Samsung and Apple, a KFTC spokesman told Reuters. Essentially, it's looking for evidence that Samsung sold product to Apple at lower prices than the chip maker sells them to local companies.

Other deals between Apple and Samsung include a 1999 "investment" in Samsung to ensure adequate supplies of LCD panels for notebook computers at a time when supply was expected to tighten.

As for the NAND Flash deal, a Samsung spokeswoman told the newsagency: "The deal hasn't breached any laws so we believe there will be no problem."

Earlier this week, Apple said it was pre-paying five NAND Flash makers a total of $1.25bn over the next three months to ensure supplies of the memory chips through to the end of 2010. Samsung is one of the five - Intel, Micron, Hynix and Toshiba are the others. Intel and Micron said this week they are to found a jointly owned NAND Flash production company. The announcement knocked five per cent of Samsung shares, 8.8 per cent of Toshiba's and 8.3 per cent off Hynix. ®